Stock Radar: Flag pattern breakout on weekly charts makes Dabur an attractive buy; likely to retest 52-week highs

The stock price of Dabur India, part of the personal care space, climbed above the 50-WMA on the weekly charts and also gave a breakout from a Flag pattern which has opened room for it to retest its 52-week highs in the next one month.

The stock hit a 52-week high of Rs 610 on December 7, 2022, but it failed to hold on to the momentum. The stock made a strong base above 500 levels in May 2023.

After hitting bottom in May the stock gained momentum and has rallied by about 13% since then. The stock closed at Rs 569 on June 15, 2023.


The momentum helped the stock to reclaim 50 and 200-WMA which is a positive sign for the bulls. On the daily charts as well, the stock is trading above most of the short and long-term moving averages.

The recent momentum is slowly pushing the stock towards overbought levels; hence some consolidation cannot be ruled out.

The Relative Strength Index (RSI) is at 69.1. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is above its center and signal Line, this is a bullish indicator.

The Nifty50 is trading in a sideways to positive zone wherein Banking, Energy, and IT stocks are underperforming whereas strong performance is observed in Construction, Auto, and FMCG.

“Performing sectors are on the spree to create all-time high levels. From FMCG space, some stocks have already picked up their movement whereas some stocks like Dabur India are seeing a catch-up rally along with very good technical structure,” Kapil Shah, Technical Analyst, Emkay Global Financial Services Limited and Trainer at FinLearn Academy', said.

“Since the year 2011, Dabur India stock has seen 5 major times. Each time, the fall was in the range of 26% to 28% followed by resumption of upside movement,” he said.

Due to the recent fall, the stock has entered the support band which coincides with long-term moving average and rising trend line support.

Strong selling pressure after decline creates characteristics of selling climax which is a very positive development.

“As a follow-up sign, Dabur stock has started to form a higher high and higher low sequence, breached immediate resistance, and is sailing above short to the long-term moving average. The stock has given valid flag pattern breakout which is a bullish continuation sign,” highlighted Shah.

“Based on the aforementioned rationale, the stock can be accumulated in the range of 570 to 560 with a stop loss of 545. The upside potential can be up to 610 level and the duration of the trade can be for one month,” he further added.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)